State’s economy needs federal spending

April 22, 2005

By Jeff Bingamen: Guest Columnist

For most Americans, the subject of the federal budget is about as interesting as diagramming sentences in a high school English class. For New Mexicans, however, the federal budget is of vital importance. Here’s why:
In the current fiscal year, direct federal expenditures made in our state will total about $18.7 billion — about four times the state government’s annual budget.

Federal spending alone amounts to more than $10,000 for every person in New Mexico.

At this level, we rank fourth in the nation in the number of per-capita federal tax dollars coming to the state.
In the “balance of payments” area, we rank No. 1 in the nation. That is to say, for every tax dollar we pay to the federal government, we receive $2 back in federal expenditures. This level of spending generates nearly one-quarter of the state’s economic activity because local businesses provide services to the national laboratories, federal agencies and their employees.

Whether you believe federal spending in our state is too much or too little, there is one inescapable conclusion: New Mexico and our economy would look very different without it.
With these interesting data points in mind, and considering the mounting pressures on our federal budget, it behooves us to closely look at our New Mexico economic situation and consider actions we could take to strengthen our position.
New Mexico First, which was founded by myself and Sen. Pete Domenici in 1986, will begin this process using a Town Hall forum this week in Albuquerque — Thursday through April 30. I would encourage your participation and learning more about this event by visiting www.nmfirst.org

Here’s why the Town Hall is important at this time.

First, we must consider what federal expenditures do for our state. Nearly every aspect of our lives is touched, including funding for health care, education, highways, water projects, border security, national monuments and forests, our nation’s defense and critical research work at our national laboratories and universities.

Second, we must consider how quickly events can change our lives and impact the federal budget. It can be argued that, for many years, the federal budget was on “cruise control.” Growth levels were modest and predictable from the middle 1990s up to 2001. During that time our nation was able to transform modest federal budget deficits into substantial surpluses.

Since Sept. 11, 2001, all that has changed. The economy suffered a substantial blow, and our defense and homeland security budgets increased at a rapid pace to respond to the worst terrorist attack on our country. Those substantial expenses, coupled with a major tax cut, came together to create the highest federal budget deficit in history, amounting to more than $400 billion in 2004.

In total, the federal deficit now stands at about $7.3 trillion, nearly three times the amount of the annual federal budget.
All of us in the Congress are grappling with how to rein in the deficit. But one thing is certain, we’re definitely not on cruise control anymore.

The White House has put forth a budget that envisions a fundamental restructuring of priorities and programs. Whether you agree with President Bush’s approach, clearly his proposals are a dramatic departure from past practices.

This year, as has been the case several times in the past, the military will examine whether bases should be closed or realigned. Spending for research at the national labs and New Mexico’s universities will be critically examined.
In total, military bases, national labs and university research account for more than $6 billion of the $18.7 billion of annual New Mexico federal expenditures. Social Security,
Medicaid and Medicare expenditures, which direct billions of dollars to our state, are likewise under intense budget pressure and scrutiny.

This is why the Town Hall on federal spending is timely and why I am looking forward to the outcome of the work done by the participants. I urge you to become involved and informed and ask that you consider attending the Town Hall.
To express your viewpoint or to obtain more information about this issue, please visit the New Mexico First Web site.
As always, I welcome any and all ideas and suggestions.

There is a lot at stake for our state.

Jeff Bingaman is a Democratic senator from New Mexico. Contact him at 202-224-5521 or through his Web site: www.bingaman.senate.gov